Press Release
DBRS Confirms Ten, Downgrades 16 Classes of Morgan Stanley Capital I Trust, Series 2005-HQ6
CMBSDBRS has today confirmed Classes A-1 through A-AB, including notional classes X-1 and X-2, at AAA with Stable trends. One shadow rating, FRIS Chkn Portfolio Roll-up, has also been confirmed.
In addition, DBRS has downgraded 16 classes, based on the following: ten loans, representing 3.7% of the current pool balance, are delinquent; an additional four loans, representing 7.3% of the pool, are current but specially serviced; and the DBRS HotList, representing an additional 9.6% of the pool. The pool is heavily concentrated in retail properties, which have been hit particularly hard by the current economic environment. As such, the DBRS Hotlist is concentrated in this property type. Of the top ten loans, five are either in special servicing or on the DBRS HotList. DBRS projected losses on 12 of the 14 delinquent and specially serviced loans to eliminate two classes, Classes S and Q, and erode a portion of Class P. DBRS did not project losses on Coronado Center because it will be transferred back to the master servicer shortly. DBRS also did not project losses on Oviedo Marketplace because the resolution strategy for the loan is unknown at this time. However, this loan is being modeled at its current low level of performance and the ratings reflect the significant default risk associated with the loan. The trend has been changed to Negative for Classes P and Q because DBRS is projecting losses to be experienced by these classes in the near term.
This pool is heavily concentrated in loans secured by retail properties, which represent 48.2% of the pool. All 75 of these loans have reported YE2008 financials, and the WADSCR is relatively strong at 1.37x. In addition, only 5% of these loans, by balance, have a YE2008 DSCR below 1.0x. However, despite this seemingly strong performance, given the current stress being endured by retailers, it is highly likely that cash flow performance will suffer materially over the coming years. This transaction benefits from having a very small concentration in hotel properties (2.2%). However, three of the eight loans in the trust secured by hotels have been transferred to the special servicer.
As part of its review, DBRS analyzed the servicer’s watchlist, the delinquent loans, the specially serviced loans, the top ten loans and the one shadow rated loan. Combined, these loans represent more than 65% of the pool balance.
Note:
All figures are in U.S. dollars unless otherwise noted.
The applicable methodologies are CMBS Rating Methodology and CMBS Surveillance, which can be found on our website under Methodologies.
This is a Structured Finance rating.
Ratings
Morgan Stanley Capital I Trust 2005-HQ6
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Contacts
Erin Stafford
Managing Director - North American Real Estate Ratings
+(1) 312 332 3291
erin.stafford@morningstar.com- Kevin Mammoser
Managing Director, North American CMBS - Commercial Real Estate Credit Ratings
+1 312 332 0136
kevin.mammoser@morningstar.com